What Is A Cryptocurrency Wallet?

Cryptocurrency Wallet
So, you’ve decided that you want to invest and buy some cryptocurrency. It can seem a bit intimidating but it really is simple once fully set up. In order to purchase the digital currency, you must first set up a cryptocurrency wallet. mobile cryptocurrency wallet Source: techhung.com A wallet, in the cryptocurrency world, is best described as a digital currency bank account. They come in many different forms but are made specifically to hold your funds. To not over complicate this though, your funds are not actually held here but your private key, a secret number, is what is stored.  That key holds the link to all the transactions that you have made, holding your current bitcoin wealth. These bitcoin wallets facilitate the sending and receiving of the currency and give ownership of the Bitcoin balance to the user. If you send 5 Bitcoins to your aunt, your wallet sends the cryptocurrency and updates your current balance instantaneously. It is very similar to transferring money from your savings account to your checking account at your traditional bank, with the funds updating once verified. As I talked about private keys before, inside every wallet are the two most important pieces of data, the public key, and the private key. These keys come together when coins are transferred from one person to another. cryptocurrency wallet private key Source: abc.net.au Let me give a brief example, Alice wants to give Bob 5 Bitcoins. So Bob gives Alice his public wallet key in which Alice uses with her wallet to send the money. It is very similar to giving your bank account number to someone, in order for them to wire transfer money to you. During these transactions, on the blockchain, Bob’s private key is being matched to his public key. Once those two keys match, the transaction is verified and added to the blockchain. The money would now appear in Bob’s cryptocurrency wallet and is free for him to use. Bitcoin wallets should not take you very long to set up. Most take a matter of minutes once your bank account information or payment method is verified on your exchange. You can use some wallets very similarly to that of an everyday spending account but there are some wallets, however, that are much more difficult to use with added security features. How you want to use your digital currency, should help you choose what wallet works best for you.   There are five different types of cryptocurrency wallets: Desktop, Online, Smartphone, Hardware, and Paper. Desktop Wallet: This is the most common type of wallet and is downloaded like software onto your computer or laptop. It is easy to install and maintain and offers a level of high security as it is only accessible from the machine that it was originally installed on - even usable when your computer is not connected to the internet. The only disadvantage is that you must keep up to date with malware and virus software, to prevent any hackers from accessing your private key. The most used desktop wallets on the market include: Bitcoin Core, MultiBit, Armory, Hive OS X, Electrum, and Jaxx. Online Web Wallet: Can only be accessed, through the internet. Coinbase, as described previously, is an online Web-Wallet. Most are extremely user-friendly and easy to use. However, this type is the most vulnerable to hacking as it is based primarily on cloud services. The most popular and used online wallets include: CoinBase, Green Address, BitGo, Xapo, CoPay and BTC Wallet. Mobile Wallet: This wallet is used primarily on your mobile network or an internet connection. It is easy to use since most of us use our smartphone for business quite regularly, and it is stored as a user-friendly app on your phone. Again it has multi-level security embedded in the software but still can be threatened by hackers, due to it being used on an open network. Jaxx, is the most popular among the cryptocurrency apps as it is IOS and Android friendly and supports various cryptocurrencies. It is integrated with the technology “shapeshift” so you are able to exchange cryptocurrencies, directly on the app. Reminder: It is highly advised to just use these wallets as means of exchange but to store your currency offline when done using it, to keep it more secure. Hardware: This type of wallet is becoming increasingly popular, as cryptocurrency grows mainstream. This wallet is (in actual physical form and work) very similarly to that of a USB drive. A hardware wallet works completely offline, making them the safest choice for anyone wary of hackers. You are able to store, send, and receive digital currency with the wallet however, the downside is that it is extremely complex to use. The most popular on the market right now are Trezor and Ledger Nano S. Just a small note on hardware wallets: You still need a software wallet to interact with the device but most have their own default software with them. You are also able to install other software wallets to interact with the hardware. Paper: This is the least common of all wallets, due to how fragile paper is. A paper wallet is a document that holds copies of the private and public keys that make up a wallet. Often it uses QR codes, so it can be easily scanned. The advantage is that your keys are not stored online anywhere and aren’t subject to attacks. The main disadvantage is that if the paper gets damaged or lost in any way, there is no way to access the funds that were sent to that address.  To set up your paper wallet visit, www.WalletGenerator.net but be warned it is quite a complex process! >>Sending and Receiving Bitcoin Transactions Once you’ve chosen a cryptocurrency wallet and got one set up, you are all set to buy/sell cryptocurrency. Happy spending! Featured Image: Depositphotos/© 3DSculptor

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